SPECULATIVE TRANSACTIONS IN 1926 MAY WHEAT FUTURE 39 
NET POSITION OF 15 FIRMS COMPARED WITH NET POSITION OF 8 LEADING 
: SPECULATORS 
Figure 9 shows the combined net position curve of the 8 large specu- 
lators compared with that of the 15 selected clearing firms of the Chi- 
cago Board of Trade. It is not necessary to explain further the com- 
position of the trading of the 8 leading speculators. The 15 clearing 
firms used were selected to represent the small or medium-sized 
traders. These 15 firms all have customers who trade in varying 
quantities. They do not include, however, any of the trading of the 8 
large speculators. They were selected out of the list of over 100 
clearing members of the Chicago Board of Trade because the bulk of 
their business is known to come from small or medium-sized traders. 
Also, these 15 firms were selected because their customers do primarily 
a speculative rather than a hedging, scalping, or spreading business. 
The market position of these 15 clearing firms is shown in Table 1 of 
the appendix. 
Contrasting the curve of the 8 large speculators with that of the 15 
clearing firms, it will be seen that the market position of the small 
traders moves in general in the opposite direction to that of the large 
traders. It is clear that on days on which large traders sell, someone 
must buy; and since hedgers change their position only gradually, and 
scalpers ‘‘even up”’ at the close of the day, and spreaders are con- 
cerned only with relative price changes, it follows that the group that 
must buy are the smaller speculators. The significant observation to 
be made from Figure 9 is the opposite relation which the two net posi- 
tion curves bear to the price curve. The net position curve of the 8 
traders changes almost always in direct relation to the price changes; 
that of the 15 firms in inverse relation to the price. The direct rela- 
tionship between the price and the net position of the 8 largest traders 
has already been considered (p. 7). When statistically compared 
they were found to directly correlate to the extent of a +0.69, with a 
probable error of +0.03. When the 15 firms representing the small 
speculative traders are correlated with the price, they are found to 
correlate inversely to the extent of a —0.74, with a probable error of 
+0.02. Both of these correlations were made for the period October 
22, 1925, to and including April 29, 1926, the period during which the 
total open commitments in May wheat exceeded the open commit- 
ments in any of the other futures. 
SUMMARY AND COGNCLUSIONS 
The material presented and analyzed in the preceding pages may 
now be briefly summarized as follows: When the trading of the 8 
largest speculators in the 1926 May wheat future on the Chicago 
Board of Trade is compared with price changes, it directly relates to 
the movements in price. This is true whether considered within the 
trading day, from one trading day to the next, or for the course of 
trading over a longer period of time. The larger the net trading or 
net position of individual speculators, the more certain it becomes 
that the trading will directly influence prices. In contrast, futures 
prices generally move in the opposite direction to the ‘‘operations”’ 
of the small and medium-sized ‘‘general public” trader. This like- 
wise is true within an individual day, from one day to the next and 
over longer periods of time. 
